The biggest sustainability challenge: Creating successful degrowth business models

What does it mean to redesign Amazon as a degrowth business? Can a fashion brand use degrowth principles to be more successful? While these questions may sound very far from the reality of sustainability-as-usual they represent the next critical challenge for the sustainability movement: Creating thriving degrowth business models. Are we ready for D-Corps?

Photo: James Stencilowsky

What is the importance of degrowth business models?

You can already start to see how difficult a degrowth redesign of the business model of a company like Amazon, or any company for that matter, would be. One thing to consider is that this is not just about changing a business model, but first and foremost about changing a mental model (or a mindset), one which brings both policymakers and business leaders to view the pursuit of growth as a key tenet of every economic system. As Nesterova points out: “At the outset, it should be noted that a transition towards a degrowth society (the aim) cannot be reduced to firms. Multiple aspects of societies, structures and agents, need to change, i.e. transform, alongside firms.”

Source: Rethinking Corporate Sustainability in the Era of Climate Crisis — A Strategic Design Approach

The narrative battle: Green growth vs. Degrowth

The ‘battle’ between the pathways is, in many ways, a competition between narratives. On the one side, you have the narrative of sustainable or green growth, which could be adjusted to represent the first two abovementioned pathways to transformation. Green growth suggests that we can eat the cake and have it too, i.e. have economic growth that is compatible with sustainability goals via “technological change and substitution [that] will allow us to absolutely decouple GDP growth from resource use and carbon emissions.” This narrative has many proponents that advocate for and promote it, including policymakers and businesses touting the benefits of what they consider to be a win-win strategy.

Source: Mckinsey and Company
TOAST Renewal. Picture: TOAST

How do you know if a company has a degrowth business model?

Nesterova’s research raises an important question — what actually constitutes a degrowth business model overall? Are there any minimum criteria? Nesterova offers a comprehensive list of characteristics, covering business operations, environmental and societal elements, and worldviews. She suggests that becoming a degrowth business would require “adopting characteristics of a degrowth business, covering the whole range of business operations and orientations where applicable, in line with degrowth.”

Picture: Bradley Siefert

We need a D-Corp movement

While lists of criteria, such as the abovementioned ones and others, may be helpful I believe that the “degrowth lens” should be broader. The translation of degrowth from a “vision of a post-capitalist political economy” to viable business models requires more than just a checklist — it requires a movement. What is needed is the type of community-building work that will create both a system in place for recognizing degrowth businesses and supporting them.

A question of timing

Businesses interested in exploring degrowth business models will no doubt go against the stream while experimenting with business models that are grounded in the notion of “less” in industries that are ingrained in “more.” These businesses will need to decide if they are ready to experiment with it now or if they prefer to wait for a broader change, where everyone in their industry shift to play by the degrowth rules to make it work. Some businesses, like the fashion startup Early Majority, “fashion’s first degrowth brand”, believe it is the former. Combining clothes designed “for maximum utility and lifespan” and a lifetime membership offered to customers “to reduce the waste and overconsumption that has defined the apparel industry,” it clearly wants its degrowth principles to play a role in building a competitive advantage. At the same time Jon Howard, the founder, acknowledges the challenges of building a degrowth model now, for example when it comes to finding investors that understand Early Majority’s mission.

Picture: Early Majority

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Raz Godelnik

Assistant Prof. at Parsons School of Design. My book (2021): Rethinking Corporate Sustainability in the Era of Climate Crisis — A Strategic Design Approach